Chapter-1 - -A statement of financial position-It is the...

1 ACCT 2001 Chapter 1 Monday, January 22 Wednesday, January 24 Accounting Equation Assets = Liabilities + Owner’s Equity-Every business transaction that takes place must satisfy the accounting equation Owner’s Equity-Represents ownership in a business 1. Paid in Capital – money that the owners put into the business 2. Retained Earnings – an accumulation of all profits of the business since the beginning. -Owners grow as the business grows-Corporations call it Stockholder’s Equity Financial Statements 1). Income Statement Revenue – Expenses = Net Income (Net Profit)-It tells how the company is doing-Must do this statement first! 2). Statement of Retained Earnings Beginning Balance + Net Income (or loss) –Dividends = End Balance-It is an accumulation of years of profits-It measures growth of a company-The owner pays himself out of retained earnings-Retained earnings is part of owner’s equity 3). Balance Sheet Liabilities + Owner’s Equity = Assets

This
preview
has intentionally blurred sections.
Sign up to view the full version.

This is the end of the preview.
Sign up
to
access the rest of the document.

Unformatted text preview: -A statement of financial position-It is the accounting equation-No revenues and No expenses on balance sheet b/c they are temporary!-The new balance from retained earnings goes into owner’s equity-Under Assets: there are current and long-term (plant)-Under Liabilities: there are current and long-term (plant) 2-If something will be with you for longer than 1 year, then it is long-term-Like Retained Earnings, it is done on a specific date Current Assets Long-Term Assets Cash Equipment Accounts Receivable Building Inventory Land 4). Statement of Cash Flow-Shows where your cash is and tracks it-3 Categories: Operating- normal business operations Investing- buying/selling plant (long-term) assets Financing- loans, bonds, stock-This is also date specific.-Shows what parts of your business have affected your cash flow Current Liabilities Long-Term Liabilities Accounts Payable Notes Payable Salary Wages...
View
Full Document